Bernard Durkan (Kildare North, Fine Gael)
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Question 106: To ask the Tánaiste and Minister for Finance the extent to which he has examined the cause or causes of hidden inflation leading to loss of competitiveness and jobs in the economy; his proposals to address the issue arising therefrom; and if he will make a statement on the matter. [8105/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Consumer Price Index (CPI) is designed to measure the change in the average level of the prices paid by consumers for goods and services. It measures in index form the monthly changes in the cost of purchasing a representative basket of consumer goods and services. The Director General of the Central Statistics Office has sole responsibility for, and is independent in, deciding the statistical methodology and professional standards to be used in compiling the CPI.

Maintaining a moderate rate of inflation remains a key priority of economic policy because of its importance in restoring competitiveness. We have no control over some of the factors influencing competitiveness, such as the exchange rate and oil prices. However, we must always seek to ensure that our domestic cost base does not undermine competitiveness. Regarding wage costs, the Government remains focused, through the partnership process, on securing a pay settlement that supports competitiveness. In this context, it is important to maintain low inflation, pursue a sensible incomes policy and keep public spending growth at sustainable levels in the medium term. This will allow us to keep the burden of taxation low, thus helping to maintain competitiveness, and to maximise our economic potential.

Bernard Durkan (Kildare North, Fine Gael)
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Question 107: To ask the Tánaiste and Minister for Finance his views on the recent European Commission comments regarding the competitiveness of the economy here; the steps he has taken or proposes to take to address the issue; and if he will make a statement on the matter. [8106/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I assume the comments referred to are those contained in the recent Recommendation for a Council Opinion on the updated stability programme for Ireland, 2007 — 2010, where the European Commission commented on the recent deterioration in our export competitiveness. This deterioration has primarily been brought about by productivity growth here not keeping pace with price developments.

The Government recognises that, in a small open economy such as Ireland's, it is imperative that sustainable export growth is maintained. Such growth can only be realised through ensuring that our economy and exports, in particular, remain competitive.

In this regard, this Government has been pursuing, and will continue to pursue, a number of policies which will underpin the future competitiveness and growth of our economy, including a firm commitment to responsible budgetary policies. Successive Governments, building on the strength of Social Partnership, have implemented policies which are aimed at rewarding both work and enterprise through maintaining a low tax burden on capital and labour. Furthermore, the continued roll out of the National Development Plan (NDP) remains a key priority for both myself and the Government as a whole. The investment in capital provided for in the NDP is helping to eliminate infrastructural bottlenecks, which hinder economic efficiency, and is also enhancing competitiveness.